Below is an overview of the key issues owners should understand before entering into a multi-vendor sale with a developer, based on common structures and problem areas we see in practice

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1. Structuring issues

The way a multi-vendor sale is structured has a major impact on risk and control for owners.

Common structures include:

  • Individual contracts of sale
    Each owner enters into a separate but largely identical contract with the developer. While this can appear straightforward, it creates a risk that one owner may refuse to proceed or default, potentially jeopardising the entire project.
  • Put and call option arrangements
    Owners grant options to the developer, allowing the developer time to obtain planning approvals, funding and pre-sales before committing to purchase. These structures often involve long option periods during which owners are effectively “locked in”.
  • Nominee or landholding vehicle structures
    Less common, but sometimes used to aggregate interests through a special purpose vehicle. These arrangements can introduce additional complexity and cost.

Key risks include:

  • Ensuring all owners are bound on materially the same terms to avoid “hold-out” behaviour.
  • Uncertainty about what happens if one owner withdraws or defaults.
  • Whether the developer can terminate selectively if minimum aggregation thresholds are not met.
  • Owners being tied up for extended periods with limited ability to exit if circumstances change.

2. Owners corporation (body corporate) issues

Where properties form part of an owners corporation, additional layers of complexity arise.

Developers often require access to common property for inspections, surveys, test drilling or marketing. This may require owners corporation resolutions, and the timing and scope of those approvals can be contentious.

There is also a risk of misalignment between:

  • Owners corporation obligations and decisions, and
  • Individual owners’ contractual commitments to the developer.

Conflicts can arise where an owners corporation decision restricts access or imposes conditions that are inconsistent with what individual owners have agreed to under their sale contracts.

3. Contract issues

Multi-vendor contracts are rarely “standard” residential contracts. They are typically heavily negotiated and developer-friendly.

Common problem areas include:

  • Long settlement or option periods with multiple extension rights.
  • Conditions precedent that are entirely within the developer’s control.
  • Broad termination rights in favour of the developer, with limited reciprocal rights for owners.
  • Insufficient security, such as low deposits or no meaningful bank guarantees.

Without careful negotiation, owners can find themselves carrying the risk of delay while the developer retains flexibility to walk away.

4. Marketing issues

Marketing dynamics can also create tension. Developers may want to publicise the aggregation to support funding or pre-sales, while owners may be concerned about privacy, market perception or the impact on individual resale value if the project does not proceed.

Where some owners are more motivated than others, inconsistent messaging or expectations can weaken the collective bargaining position and increase the risk of fractured negotiations.

5. Tax issues

Tax consequences are one of the most commonly overlooked — and most expensive — aspects of multi-vendor sales.

Capital Gains Tax (CGT)
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CGT events may occur earlier than expected, including:

  • On the contract date, or
  • On the grant of an option in a put and call structure.

Long delays between contract and settlement can create serious cash-flow issues if CGT is payable well before sale proceeds are received. Access to the main residence exemption may also be affected, particularly where options are used or settlement is significantly delayed.

GST
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While residential premises are generally input-taxed, GST can arise where:

  • An owner is registered or required to be registered for GST, or
  • The sale is characterised as a profit-making undertaking.

A particular risk in multi-vendor sales is inconsistent GST treatment across different owners, which can complicate settlement and pricing.

Land tax and holding costs
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During extended contract or option periods:

  • Land tax continues to accrue.
  • Owners corporation levies and special levies remain payable.
  • Increases in land tax or outgoings cannot usually be passed on to the developer unless expressly agreed.

6. Practical risk management for owners

While risks cannot be eliminated entirely, they can be managed with early and coordinated advice.

Owners should:

  • Obtain independent legal advice that is not developer-nominated.
  • Align early with other owners on:
    • Minimum acceptable pricing,
    • Timeframes, and
    • Non-negotiable terms.
  • Insist on:
    • Clear long-stop dates,
    • Strict limits on extensions,
    • Meaningful developer security (such as deposits or bank guarantees).
  • Seek tax advice early, particularly in relation to options, CGT timing and potential GST exposure.

Key takeaway

Multi-vendor sales to developers can deliver a significant price premium, but they are not simply “bigger” versions of ordinary property sales. They often shift leverage heavily to the developer, tie up owners’ properties for long periods, and create tax and cash-flow surprises if poorly structured.

Careful planning, coordinated owner alignment and early professional advice are essential to ensuring that the promised upside is not eroded by avoidable legal and financial risks

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